New offset guidelines soon to spur defence output: Parrikar

Belagavi (Karnataka) (IANS) New offset guidelines would be ready by this year-end to spur defence production in state-run and private enterprises, Defence Minister Manohar Parrikar said on Monday.

“Though India is a net importer of defence equipment, the new offset clause will enable us to buy defence products valued at $8-10 billion per annum from our industry over the next five years,” he said at a function to unveil Aequs Aerospace machining facility, set up for the Airbus group, in this northern Karnataka town.

Claiming that the offset budget committed by overseas defence suppliers was $28-29-billion, Parrikar said it could exceed $35 billion this fiscal if some of the deals being negotiated go through this year.

“As the new set of guidelines will bring a big change in joint defence production, the private sector should partner with the public sector and invest in capacity expansion without any hesitation,” he said.

The defence offset policy mandates overseas suppliers to invest at least 30 percent of the contract value of products sold to the armed forces in setting up joint ventures for making sub-systems, components and accessories for exports and local consumption.

Admitting that trust deficit and wrong mindset had slowed growth of the defence industry, Parrikar said the offset clause had been modified and the government would open up the sector further, as evident from allowing foreign direct investment up to 49 percent in joint ventures.

“We want to ensure that defence production is not scuttled by changing the mindset and creating a proper environment for building the eco system,” he noted.

The eight-year-old Aequs is the first Indian private firm to bag an order from global aerospace major Airbus Industries to deliver components and is the only certified manufacturer of the US-based Boeing parts in the sub-continent.